ECB’s Nagel Cautions Those Speculating About Early Interest Rates Cuts

20 December 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Wednesday warned whoever was expecting interest rates to be cut soon to be cautious with such speculation.

In an interview with German news portal t-online, Nagel, who heads the German Bundesbank, said that the ECB’s decisions were taken on a meeting-by-meeting basis and that it was 'highly likely that interest rates have reached their peak.'

'To all those who have therefore gone straight to speculating about imminent rate cuts, let me say this: people have been known to back the wrong horse, so be careful', he said.

For now, the ECB needed 'to remain on the current interest rate plateau so that the inflation-dampening effect of monetary policy can fully take hold', he said.

‘Over the medium term, inflation is heading in the right direction: downwards', even if the new year would likely bring an uptick in inflation rates, he said. 'All in all, we need to remain vigilant: combating inflation isn’t a task that will take care of itself.’